In the first U.S. presidential election debate, President Donald Trump made statements alluding to possible manipulation of votes already sent by mail and declared he could contest the elections if he thought the votes were flawed.
Those statements have introduced the real possibility of election results not necessarily ending the electoral process. Charles Schwab strategists now weigh in on the matter, and their opinion is that voters should gear up for delays.
These delays, according to Charles Schwab, may stem from the processing times for mail-in ballots. Mail-in ballots are expected to increase significantly, as many voters may prefer to use the postal system than to be forced to queue close to other voters in the light of the massive coronavirus pandemic in the U.S.
As many as eleven states will not allow the opening of these mail-ballots until election day, which could lead to a pile-up of mail-in votes, potentially lengthening any pre-existing delays. Three of these are critical battleground states are responsible for as many as 46 electoral college votes: Michigan, Pennsylvania and Wisconsin were all swept by Trump in 2016. The strategists at Charles Schwab think that counting of these ballots could stretch several days.
Mail-in ballots are more prone to disputes, and President Trump has not hesitated to hammer in this fact. As it is, the prospect of legal challenges to any of the state electoral college results is relatively high. Any wonder why there is so much fuss about filling the existing vacancy in the Supreme Court?
Republicans would rather have the vacancy filled before the election to retain a right-leaning majority. Democrats would prefer to have the seat stay vacant until after the votes, which could potentially create a voting balance in any election suits that would require Supreme Court intervention.
There is a precedent to all this. The U.S. Supreme Court decided the 2000 election. The Bush v. Gore, 531 U.S. 98 (2000) U.S. Supreme Court decision blocked a recount of the votes in Florida as ordered by the State of Florida Supreme Court. Republican George W. Bush (who had been awarded the state of Florida’s electoral college votes in the results) led Democrat and incumbent VP Al Gore 271 – 266 in one of the closest US election results ever. The Supreme Court ruled in a 5-4 decision that a recount could not be completed by the December 12, 2000 deadline, effectively nullifying the state court-ordered vote recount.
If confirmed by the end of the month, Amy Coney Barrett would be the second nominee of Trump to become a Supreme Court judge. Democrats know how crucial this may turn out if any election cases have to go down to a supreme court vote. The thought of a single judge’s vote deciding an outcome as it did in 2000 may be alarming to a lot of people.
For the financial markets, Charles Schwab’s strategists are saying that the time to watch would be between “election day (November 3) and the state certification deadline (December 8)”. If no winner emerges in 24-48 hours, market volatility over the U.S. Dollar, USD Index and many other assets may be the order of the day.
Technical Outlook for USD Index
Today, the USD Index has entered the day on the back foot. The 0.39% drop on the day sends the USD Index back to test the 93.17 support (neckline of rounding bottom pattern). If this support line collapses, we could see 92.50 or 91.91 coming into the picture as future downside targets.
On the flip side, a bounce on 93.17 takes the U.S. Dollar index towards 93.80, with 94.62 and 95.19 lining up as potential upside targets. As the U.S. election draws near, price action will interact with these various levels more than once with increased volatility.